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Choosing an Extended Warranty for a Used RV

First, a fun video about inspecting our “new to us” RV for an extended warranty. After the video you can find everything you wanted to know about the what, where, why, and how much in our blog!

One of the more challenging decisions we’ve faced after purchasing a used RV is whether to purchase an “Extended Warranty” to help cover any upcoming repairs to the coach.

We bought a thirteen-year-old RV. It may have only 7,000 miles, but it was still used for vacationing. After a few trips, it seems the former owners simply parked it in a seasonal campsite near the shore and enjoyed it as a summer vacation home. That means 13 years of use for the furnace, air conditioners, refrigerator, plumbing system, electrical system, and all other mechanical parts such as slides and jacks.

So, what are some repair costs we might be facing? Let’s consider the refrigerator. RVs have highly specialized refrigerators that can run on both electric and propane, and switch automatically between the two cooling systems depending on what’s available at the time. A quick check at Camping World shows that the replacement cost for our four-door refrigerator with icemaker is $3,700 – on sale! And that doesn’t include installation.

And what are the odds that we’ll have to make expensive repairs sometime in the next few years? Almost 100%. Imagine what life is like for appliances, electronics, plumbing, etc. in a motorhome, bouncing down the highway at 55 miles an hour or down pot-holed back roads in search of the perfect wilderness campsite. Try picking up your water heater and shaking it around for a few hours and see how well it holds up!

Also, consider that RV plumbing systems are, of necessity, made of flexible rubber and plastic. Even without use, gaskets and glue will dry out and connections will loosen. Imagine a fitting bursting open and the floor of the motorhome covered in an inch of water.

Bottom line: There are thousands of things that can go wrong with anything from the engine to the air conditioner, and all of them are much more expensive to repair or replace because they are in an RV.

So, we began research on RV Extended Warranties.

WHAT IS AN EXTENDED WARRANTY?

The first thing to realize is that “Extended Warranties” are not true warranties at all. They are insurance policies, and as is true with all insurance policies, most people will never get back as much as they ultimately pay in premiums. Insurance is all about shared risk. To oversimply, your premiums go into a large pool along with every other insured, and everyone’s claims are paid out of the same pool. Insurance companies are in the business of making money. They research how much they’ll have to pay in claims, on average, from a large pool of insureds. Then they set everyone’s premiums high enough to be sure that that pool of money is always larger than the most they expect to pay in claims. Whatever is left over at the end of the year is their profit.

Some people will have claims for repair that are much, much higher than they ever paid in premiums. Most people will spend more on premiums than they would have on repairs. So, most people lose money by buying insurance, but they will know that there is a limit to their overall risk. That helps with both peace of mind and budgeting. And if they don’t buy RV insurance, and they end up with some huge repair bills – well, let’s just say that we don’t want to be in that group!

WHAT TO CONSIDER WHEN RESEARCHING WARRANTIES

What’s Covered – and What’s Not

When considering an extended warranty, it’s important to read the fine print and be sure that you know exactly what is and is not covered, and under what circumstances.

Some companies offer what are called “Inclusionary Policies,” which means that your contract will give a detailed (sometimes excruciatingly detailed) list of anything and everything that they will pay for if it breaks or stops working. Other companies have “Exclusionary Policies” that list what is not covered. Some policies are a hybrid of the two. The benefit of an exclusionary policy is simple: If it’s not listed, it’s covered. On the other hand, an inclusionary policy may cover the left-widget, but not the expensive gizmo that you need to make the left-widget work. And since insurance companies make money by not paying claims, you can be sure that the cost of the gizmo and the labor to install it is coming out of your pocket.

Some policies cover only the basic systems of the RV, while others cover or charge extra for “luxury” items such as icemakers, TVs, motorized awnings, etc. Know what you have, and know what’s covered.

Another factor to consider is how or whether the policy covers “consequential damages.” Consequential damages are those caused to one part of the RV because a different part failed. Some policies will not pay for consequential damage. For instance, if your uncovered fan belt fails, causing your covered engine to seize, that covered engine is not covered in this circumstance because its damage is caused by the excluded fan belt. Not good for you!

It gets even trickier. Some companies define “consequential damage” as damage to a covered part by the failure of an uncovered part (as above). But others define “consequential damage” as damage to an uncovered part because of the failure of a covered. This makes it almost impossible to make a side-by-side comparison.

2. Rules and Restrictions for Service

Understandably, warranty companies don’t want to pay for unnecessary or excessive repairs. And, unfortunately, all too many people try to pad their claims so that they’ll “get their money’s worth” out of their warranty. So, ALL warranty companies have very specific processes and procedures that you MUST follow before getting any repair work done. If you don’t follow their requirements TO THE LETTER, they will certainly deny your claim.

Most policies require that you get a detailed estimate, and then have that estimate pre-approved by the warranty company before any work is done. Anything done before you receive approval will not be covered. Anything done that’s not included in the approved estimate will not be covered. If the mechanic discovers more problems that need to be fixed, the additional work must be submitted and pre-approved.

Some policies may require you to have repairs done by one of their own approved facilities. Others will work with any certified mechanic, and even mobile mechanics who will come to you.

Internet forums are full of complaints about warranty companies refusing to pay for necessary repairs to RVs. If you dig a little deeper the story is almost always the same: The owner was in a hurry and couldn’t reach the warranty company because it was a weekend, or a holiday, or they had to get back on the road right away to reach their destination so they went ahead and got the repair that was “obviously” needed, then screamed when the warranty company refused to pay. With an extended warranty, you will have to make a choice between waiting a few days for the pre-approval process and getting paid for your claim, or getting it fixed right away so you can continue with your vacation—and paying for that repair out of your own pocket, which really defeats the purpose of having a warranty.

3. Cost

The cost of extended warranties is influenced by a multitude of factors including the age, mileage, and value of your RV; the size of your deductible (the amount you pay before insurance kicks in); the length of the warranty; the exclusions and inclusions; and the amount of time you spend in your motorhome each year.

All companies offer varied levels of coverage. Some look inexpensive until you realize that they charge extra if you spend more than a certain number of weeks on the road each year, or want consequential damage coverage.

A good question to ask yourself is: “What’s the maximum amount I can (or I’m willing to) pay out-of-pocket for an unexpected repair?” The higher the deductible, the less expensive the policy will be. Choose a deductible based on what you’re best able to afford.

Be aware that different policies base their deductibles on different criteria. Some charge your deductible “per visit” to a repair center, so your total deductible will be the same whether you have one or ten items repaired while you’re there. Others charge separate deductibles per incident, so don’t get other problems fixed while you’re having your insured repair done or you’ll pay a deductible on each repair.

4. Reputation

A warranty is only as good as the company that issues it, and I’m sad to say that I’ve encountered far-too-many stories of people who were sold extended warranties and submitted claims, only to learn that the company has a policy of repeatedly denying claims in the hope that you will give up and go away. Even worse, in some cases people have learned that their warranty company has gone bankrupt or out of business. For that reason we only considered warranties from companies with good financial ratings and a long track record in the business.

OUR CHOICE

We received proposals from three different warranty companies: Good Sam, Coachnet, and Wholesale Warranties.

Good Sam offered us a one-year policy for $1,438 with a $500 deductible. We quickly eliminated them from consideration because of the length of coverage, overall reputation, and the fact that this was an inclusionary policy.

Coachnet offered a basic five-year policy for $4,744 with a $200 deductible. After adding in special riders for “luxury” items, permanent residence (Using the RV more than a couple of months a year), and consequential damage, the premium came to $5,562. Coachnet has a good reputation, especially for their roadside service, but we were unhappy with their definition of consequential damage (payment for failure of an uncovered part if it is caused by a covered part).

We chose to purchase a policy from Wholesale Warranties. They offered us a three-year, 30,000 mile exclusionary policy for $4,293 with a $200 deductible. The policy covers permanent residence and consequential damage defined as “the repair of a Covered Part if the failure of the Covered Part was caused by the action or inaction of a non-covered part,” which makes the most sense to us. There is no surcharge for “luxury” items such as our washer/dryer. They have a very good reputation and were remarkably thorough in making sure that the policy is tailored to our needs and that we fully understand what is and isn’t covered.

We decided that the coverage from Wholesale Warranties makes the best sense for us. Besides the excellent coverage, this is our first RV, and it is a 2004. We are buying peace of mind as part of the warranty. There’s also a chance that we might not want to RV for more than three years, or that if we do, we might want to trade in our motorhome for something different. If we love our RV and RVing, we can keep our Fleetwood Southwind 37A or downsize to a trailer or who knows what. If we sell before the three years are over, the warranty is transferrable to a new owner. For all these reasons, we chose the three-year policy with Wholesale Warranties. We hope it’s a good choice!

Since we are buying coverage for a used RV, Wholesale Warranties arranged for an independent mechanic to do a thorough inspection of our motorhome before our coverage begins. The benefit to them is that they will not have to pay claims for anything that is already broken. The benefit to us is that we will not be denied coverage for any component that passes inspection, as long as we keep a record of all necessary maintenance (such as oil changes) from this date forward.

Our motorhome inspection was done by Fred Sumner of Vehicle Appraisal Services in Camden, Delaware (fredsumner@msn.com). A former aircraft mechanic, he couldn’t have been more thorough or helpful. Fred opened every hatch, drawer, cabinet, and cubby in the entire RV, turned every appliance off and on, rode along on a test-drive, and took hundreds of pictures during his inspection. He found a couple of minor problems which we reported to the dealer to be taken care of before we take delivery next week. If you’re thinking of buying a used RV and you live near Delaware, whether or not you’re buying an extended warranty, I highly recommend that you hire Fred to do the same kind of inspection before you write the big check and take your rig home.

If you’ve read this far you must be REALLY interested in extended warranties for RVs. If you’re in the market, please contact www.wholesalewarranties.com with this link to see if their product is right for you. If you mention us by name, we’ll get a small “thank you” gift from the company.

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